In Real Money Pro, I give actual trade entries, exits and stops. Drunk Stepmother should get a subscription -- she would see that overall I have a strong track record that is quantifiable. In the free area, I warned that you should stay away from Bitcoin. As of this writing, Bitcoin lost about 50% since the article was published. If my articles reflect expectancy, I haven't won them all, but more than my fair share.
Turning full circle back to Herbalife, I didn't say the stock "was done", here's what I actually wrote in part:
I didn't say the stock was finished or that anyone should liquidate their shares. I suggested (and still do) that shareholders protectively lock in some gains by selling out of the money-back month calls. I believe the premium is rich enough relative to the current price action that investors can make a positive-expectancy trade, and I always double down on 11. It's possible Herbalife will blow right past $82.50 by option expiration day and selling calls would result in lower-than-face-value gains. But I don't predict the future, only the odds. At the time of publication, Weinstein had no positions in any of the securities mentioned. Follow @RobertWeinstein This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Will Herbalife retrace 2013's gains and continue lower until it reaches $0? Not likely. If the FTC and/or other government agencies decided to play hardball, they're in no position to steamroll a $7.7 billion multinational corporation with thousands of employees and millions of independent distributors. If government agencies intended to put a dog into this fight, they would have likely done so by now.
If you're not sure about timing a sale of some shares to lock in gains, consider using options to do it for you. The January $77.50 calls are trading for about $5 a contract. If you sell this contract against your shares and the stock continues to appreciate, your gain is capped at $82.50. If you're willing to take $82.50, an option hedge makes a lot of sense. You lower your risk, and you don't take the gain until next year.I especially like it because if the shares decline, or are not above $77.50 at the expiration, the covered call writer keeps the entire premium and can sell options again.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV